Democrats Block Effort to Reduce Estate Tax, Raise Minimum Wage

Republicans fell four votes short of advancing a bill that combined two key issues for business owners.

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A Republican bill that sought to combine a permanent reduction in the estate tax with an increase in the federal minimum wage failed in the Senate on Thursday, after Democrats blocked the measure.

Republicans had hoped that tying the first minimum wage increase since 1997 to an estate tax reduction would generate enough support from Democrats, who have opposed past efforts to repeal what critics call the "death tax." Both issues have been closely watched by business owners.

Under current law, the estate tax, which taxes million-dollar assets passed along as inheritance, is gradually being phased out by 2010, only to be reinstated the following year at a rate of 55%.

The proposed legislation would have raised the federal minimum wage from $5.15 an hour to $7.25 an hour over a three-year period. It would have also raised the amount of an individual's estate that would be except from the estate tax to $5 million by 2015, with $10 million exempt for a couple. The bill also included other tax incentives.

A day before the summer recess, the final vote stood at 56-42, four votes short of the 60 Republicans needed to put the issue to rest. Senate Majority Leader Bill Frist (R-Tenn.) changed his vote from "yes" to "no" at the last minute to allow him to move to reconsider the issue without filing cloture.

"I don't know when and if the issue will come up after August, but as the majority leader, he was reserving the right to have all options available to him," said Carolyn Weyforth, a spokeswoman for Frist.

Democrats claimed the bill was a partisan trick that would turn off voters. "I'm all for fixing the estate tax, but there is no reason for this fiscally irresponsible, virtual repeal," Senate Minority Leader Harry Reid (D-Nev.) said during a speech on the Senate floor before the vote.